Unless I completely miss my bet, you also made sure that you would be able to handle the the mortage when the loan reset. There does exist a difference between someone taking a mortage knowing the possibility that the loan will reset and they may be stuck with it and someone who takes on that type of loan and hopes to roll it when the time for the reset occurs.
I had calculated my mortage, if I had seen anything that indicated a substantially smaller monthly payment than I had calculated, I would have asked questions. My neighbor was totally unaware that she had a mortage package like that until it reset.
Actually...I knew how many the max percentage points it could go to, but not
what it would go to.
I also accepted the fact that I had 2 choices when it came time to reset. I could refinance it or I could sell it. When the first reset came up....I refinanced it with a different company (Countrywide). And got a lower interest rate than on my original ARM
When it came time for the reset on my second ARM...Countrywide called me up. They told me they could lower my interest rate if I did another ARM with them. I told them I would do it only if I didn't have to provide any documentation to them...that they would base it on my payment history.
They agreed.....2 weeks later, they called and asked for my 1099's, my tax records, my bank statements and a copy of my divorce documents.
I told them they had a choice.....since they had called me and offered to refinance my loan, with no documentation...they could either do what they said....or I would refinance with Wells Fargo or sell my house. Either way, they would be out the money. I closed on the new note a week later....without providing any documentation.
I also was never late on a payment the next 34 months....when I sold the house.
However.....if I had had to go through with providing the documentation ....I would never have received the loan.
I am self employed and a divorced female. Can't get much worse for getting a mortgage. I also think....that having to provide divorce papers 10 years after a divorce is a serious invasion of privacy.
The difference between myself and many other homeowners getting an ARM....is not that I am smarter or better at handling my finances or more well-off....it's that I may have a better understanding of how an ARM works....simply because I have been in real estate for so long. It's a matter of awareness and knowledge. Many people have absolutely no concept of what their mortgage entails....they are told by the lender how much they can spend, how much the downpayment must be, and what their payment will be. Beyond that...they know nothing....rarely are loan papers read at a closing before signing. In all my years, I bet not more than 5 buyers have asked for their loan papers prior to signing and most of them were transferees into the area, and their relo companies actually were the ones who reviewed the documents. I have only had 1 read the documents at the closing table.
For example....I'm going to look at cars tomorrow because my lease will be up in September and the Nissan dealership called and said they would pay off my lease if I would get another car from them in the month of March.
The other half is going with me....what I know about cars and negotiating the lease would fit in a thimble with a whole lot of room left over. I'm on my third leased car...and he's negotiated all of them. I know houses ....I don't know cars. So I take someone with me that I trust and who
has the knowledge that I don't, to do a good job for me.
House purchases are the same way. If a buyer doesn't know what they are doing...they need to work with a reputable realtor who will also make sure that they are working with a reputable lender....both of which have a responsibility to the buyer to make sure that the buyer understands the
entire process of purchasing a home and all the responsibilities that they are taking on with the purchase of that home.
Sadly....some people ....just are convinced they know everything about everything and they know it better than anybody else possibly could. Those individuals are one group of people who tend to get themselves into situations they know nothing about and are too proud to admit they are in trouble and won't ask for help until it is too late to help them out of bad situations.
Even prior to the current mortgage crisis.....lenders did not want houses back. It's amazing to me....how many houses I have seen in foreclosure...that were either never on the market prior to the foreclosure or that the homeowner never contacted the mortgage company until it was too late to save the home.
Many lenders...especially now....will hold off on foreclosure....provided the house is listed with a reputable real estate firm and is actively being marketed. The lender will agree to a short sale (less than what is owed on the property)....because in many instances, it will still save the lender money rather than foreclosing.
